Chairman of S.E.C. Briefs Panel on Audits

Published: September 29, 2000

WASHINGTON, Sept. 28—
The Securities and Exchange Commission chairman, Arthur Levitt, offered a private briefing to a Senate subcommittee today on what he called credible evidence that consulting for audit clients can taint accountants' financial reports on those clients.

Mr. Levitt, testifying on proposed S.E.C. auditor independence rules before a Senate Banking subcommittee, said that the briefing by his enforcement staff would ''illustrate some of the more egregious cases of financial misdeeds, of accounting misdeeds that we have before us.''

Asked by Senator Evan Bayh, Democrat of Indiana, if the briefing would present some concrete suggestion that the level of consulting payments from a client compromised audits of that client, Mr. Levitt responded, ''I'd prefer to let the briefing speak for itself.''

Robert K. Elliott, a KPMG International partner who is the departing chairman of the American Institute of Certified Public Accountants, said a confidential briefing would be unfair. ''It would be like a grand jury proceeding -- in secret, with only the prosecutors there giving one side of the story,'' he said. ''The targets haven't had a chance to see what the allegations are and defend themselves.''

The S.E.C. proposal at issue in the hearing would restrict accounting firms in their providing of consulting services to companies that the firms also audit.

Mr. Levitt has warned that auditors have potential conflicts of interest in auditing a company while their firm performs consulting work for the same corporation.